Payments Innovation Is About Keeping Top of Wallet to Top of Mind

The borders delineating digital technologies and payments are becoming increasingly blurred.

And that’s a good thing.

“We see payments moving up the funnel,” Rachel Moore, senior vice president and head of incubation at Synchrony, told PYMNTS as part of the “What’s Next in Payments series: Current State of Payments Innovation.” “From social settings, livestreaming, marketplaces — it is all about getting as close to the decision as possible and showing up in the discovery process.”

“More broadly, we call this trend embedded payments, and it encompasses the whole framework of being present [with payments],” Moore added.

In the world of finance and commerce, innovation in payment systems is at the forefront of transforming the way consumers shop, transact and manage their finances.

But as innovations advance at a rapid clip, it is critical to ensure that new technologies integrate seamlessly into relevant contexts and existing architectures, allowing end users to foster engagement with their businesses and track key metrics in real time.

“It is crucial to integrate payments — or the option to pay using innovations like financing offers — right there in the event itself, which ties back to the notion of contextual payments and being where the shopper is,” Moore explained.

Younger generations are increasingly making purchases through platforms like Instagram, emphasizing the importance of being present during the discovery phase of shopping.

Livestream video and one-click shopping are becoming more prevalent, enhancing the shopping experience — but merchants need to be aware that many options available today take the end-user away from the experience to facilitate the purchase.

That’s why Moore said that her approach to payments innovation is centered around identifying and solving for horizon-to-technology trends, and then aligning them with the payments and shopping ecosystem.

Evolving Trends in Payments Innovation

The trend-to-product pipeline typically draws from one of three buckets, Moore explained.

The most immediate bucket is full of Horizon 1 trends (1-2 years out), which focus on existing roadmaps and known opportunities; while Horizon 2 trends (2-4 years out) entail identifying potential technologies that may materialize and require dedicated resources for integration. Lastly, product development that pulls from Horizon 3 trends (4+ years out) represents innovation areas where firms like Synchrony are exploring cutting-edge payment concepts in a lab environment.

Many significant developments in payments innovation today — and those informing the capabilities of tomorrow — are taking place where consumers are by bringing embedded payments to them, rather than taking them to the payment.

“Embedding payments in the shopping journey through virtual cards is big, and digital wallets are probably the most relevant innovation,” Moore said.

She noted that what is interesting and pushes the familiar into the realm of innovation, is the ability for tokenization.

“Once you tokenize the payment, that’s where you can take the underlying technical capability and see what else you can do with it… things like one-click shopping wherever you might be and seamless authentication,” Moore said.

The Importance of Getting Discovered

Synchrony offers instant provisioning of credit and virtual cards into third-party wallets, making payments more convenient for consumers, especially in embedding payments within social media platforms.

That’s because, as Moore said, “it is always going to be a race for the end user. Whoever owns the customer relationship can influence payment decisions… loyalty is so critically important. It is one thing to get somebody to transact on your product. It is another entirely different thing to get them transacting on your product all the time, to be top of wallet.”

And while crystal balls may not exist, Moore provided insights into areas to watch for in the coming years. She highlighted two key areas: the role of hardware and applications of generative artificial intelligence (AI).

Next-generation hardware devices like augmented reality headsets and more are expected to influence payment decisions, requiring close attention from the industry.

As generative AI evolves, Moore added, it has the potential to enhance the discovery phase of shopping, making it more delightful and meaningful.

“The world is rapidly, rapidly advancing at rates that are hard to stay on top of,” Moore said. “That’s why payments players need to be super focused so they can learn as quickly as possible and be as iterative as possible around innovation trends. You need to be just as structured with the world of tomorrow as you are with the world of today.”